Before a mysterious respiratory illness emerged in the center of China, spreading with lethal effect through the world’s most populous nation, concerns about the health of the global economy had been easing, replaced by a measure of optimism.
The United States and China had achieved a tenuous pause in a trade war that had damaged both sides. The specter of open hostilities between the United States and Iran had reverted to stalemate. Though Europe remained stagnant, Germany — the Continent’s largest economy — had escaped the threat of recession.
Now, the world is worrying anew.
An outbreak originating in China and reaching beyond its borders has summoned fresh fears, sending markets into a wealth-destroying tailspin. It has provoked alarm that the world economy may be in for another shock, offsetting the benefits of the trade truce and the geopolitical easing, and providing new reason for businesses and households to hunker down.
On Monday, investors dumped stocks on exchanges from Asia to Europe to North America. They entrusted their money to traditional safe havens, pushing up the value of the yen, the dollar and gold. They pushed down the price of oil over fears that weaker economies would spell less demand for fuel.
In short, those in control of money took note of a growing crisis in a country of 1.4 billion people, whose consumers and businesses are a primary engine of economic growth around the world, and they chose to reduce their exposure to risk.
By late Monday, the virus had killed more than 80 people in China. Nearly 3,000 had been infected — mostly in mainland China, but also in Hong Kong, Japan, Macao, Malaysia, Nepal, Singapore, South Korea, Taiwan, Thailand and Vietnam, and as far away as Australia, Canada and the United States.
The emergence of the virus in China, whose government jails journalists and tightly controls information, left the world uncomfortably short of facts needed to assess the dangers.
“It’s the uncertainty of how the global economy is going to respond to the outbreak,” said Philip Shaw, chief economist at Investec, a specialist bank in London. That will depend on the severity, the spread and the duration of the outbreak, he said, and “we don’t really know the answers to any of these questions.”
What was left to the imagination resonated as a reason for investors to unload anything less than a sure thing.
Stocks in Japan and Europe fell more than 2%. In New York, the S&P 500 was down 1.6%, with stocks of companies whose sales are dependent on China especially susceptible. Wynn Resorts, which operates casinos in the gambling haven of Macao, a special administrative region of China, dropped more than 8%.
The virus and its attendant unknowns conjured memories of another deadly illness that began in China, the 2002-03 outbreak of severe acute respiratory syndrome, or SARS, which killed nearly 800 people.
“In many ways, it looks similar,” said Nicholas R. Lardy, a China expert and senior fellow at the Peterson Institute for International Economics in Washington. “We are seeing fast increases in the number of cases. The hospitals are overwhelmed and are not even able to test people with symptoms. I’m expecting the cases to go way, way up.”
In the end, SARS significantly slowed the Chinese economy, dropping the annual growth rate to 9.1% in the second quarter of 2003 from 11.1% in the previous quarter, according to Oxford Economics, an independent research institute in London.
The episode is coinciding with the Lunar New Year, a major holiday in which hundreds of millions of Chinese journey to their hometowns to visit relatives. With air, rail and road links in central China restricted as the government seeks to block the spread of the virus, hotels, restaurants and other tourism-related businesses are likely to suffer.